The United Arab Emirates plans to allow foreigners to own a majority stake in firms in the Gulf Arab state, the economy minister said on Saturday. At present, foreign investors can hold up to 49 percent of a company registered in the country and can own only 100 percent in ventures located in dedicated free zones, most of which are in Dubai emirate, the region's trading hub.
"There will be some opening for foreign ownership. Foreign ownership will be more than 49 percent," Economy and Planning Minister Sheikha Lubna al Qassimi said without elaborating.
The new company law could be passed by the third quarter of 2005, she told a gathering of bankers in Dubai. "If you look at the unprecedented growth we are seeing in the UAE today, the (existing) laws are no longer fit for the fast growth," Sheikha Lubna said.
Economists say the Opec member state's real gross domestic product is expected to grow by around 6 percent this year after a similar increase in 2004 thanks to high oil prices and a domestic investment boom.
Analysts say that while free zones offer zero taxation, first world infrastructure and limited red tape, they have drawbacks like relatively high rents, out-of-town locations and the need for a local partner to sell goods inside the UAE.
The minister said the UAE was also reviewing its "agency law" which stipulates that foreign firms can only sell goods through a local partner.
The UAE, which is a member of the World Trade Organisation, is holding free trade talks with the United States and US officials have urged the country to change its agency law. The proposed amendments are part of an economic reform plan that Sheikha Lubna launched when she took office in November.
Sheikha Lubna said the ministry was also working on a new capital markets law to address issues such as insider trading and lack of transparency among some firms listed on the country's twin stock markets.